Financial Management Commons

Whether for tax, legal, or business reasons, there is a tremen-dous need for the valuation of small businesses. Oppressed minority shareholder suits and equitable distribution actions are the most common legal reasons for valuations, while pur-chases and sales of companies are common business reasons. Oftentimes, however, small businessowners do not have the knowledge or the wherewithal to gather the data and keep it up to date for use in situations that require valuation. Small businesses are usually controlled by few people and shares of stock are not regularly traded on any exchange. Nevertheless, formal valuations are necessary because they provide objective evidence of value, in contrast to publicly traded companies where value is set by the markets on which they are traded. Owners often develop expectations concerning the value of their company by utilization o